Case Studies
$5.57M Secured for Low-Cash Flow Montessori Acquisition
Property Snapshot
Location:
Washington, D.C.
Purchase Price:
$7.96M ($421/SF)
Loan Amount:
$5.57M (70% LTV)
DSCR:
Less than 1.00x
Property Type:
Single-tenant, net-leased Montessori school
The Challenge
This deal had multiple strikes against it from the start:
- A short lease term with just three years remaining
- In-place rents far below market, resulting in a DSCR under 1.00x
- A borrower preference for a local bank, which narrowed the pool of willing lenders
- Re-trades from multiple lenders, some walking back their original offers due to conservative cash flow assumptions in the appraisal—even though the valuation came in above the purchase price
The Plan
Marblestone approached the deal with a clear objective: structure around the challenges without compromising the borrower’s goals.
Rather than chasing approvals from lenders who would eventually walk, the team recalibrated the strategy to focus on targeting capital sources that could look past current income and focus on asset value and future upside. The team repackaged the underwriting, reframed the tenant risk, and negotiated directly with lenders who understood the strength of the location, the operator, and the long-term potential of the asset.
When one lender proposed a re-trade, Marblestone was already in conversations with a backup bridge lender, ensuring the client wasn’t left exposed. That parallel track gave leverage in negotiations and confidence in the timeline.
The result was a structured deal that solved all the pain points:
- 3-year fixed loan, extending six months past lease expiration
- 0% prepayment penalty, giving the borrower flexibility
- Local bank lender, aligned with the borrower’s preference
The Outcome
A $5.57M loan closed at 70% LTV with no prepay penalty and a fixed interest rate of 7.25%. The structure provided breathing room, preserved long-term flexibility, and met the borrower’s goal of working with a local relationship lender.
Key Takeaways
Creative structuring can overcome short-term lease and DSCR challenges
Backup lending strategies protect client leverage during negotiation
Reframing the narrative makes the difference in lender response